FinVolution Group (FINV) 2023 Q2 法說會逐字稿

Hello, ladies and gentlemen. Thank you for participating in the Second Quarter 2023 Earnings Conference Call for FinVolution Group. (Operator Instructions) Today's conference call is being recorded. I will now turn the call over to your host, Jimmy Tan, Head of Investor Relations for the company. Jimmy, please go ahead.

女士們、先生們，大家好。感謝您參加 FinVolution Group 2023 年第二季度收益電話會議。 （操作員指示）今天的電話會議正在錄音。我現在將把電話轉給主持人、公司投資者關係主管 Jimmy Tan。吉米，請繼續。

Hello, everyone, and welcome to our second quarter 2023 earnings conference call. The company results were issued via Newswire services earlier today and are posted online. You can download the earnings release and sign up for the company e-mail alerts by visiting the IR section of our website at ir.finvgroup.com. Mr. Tiezheng Li, our Chief Executive Officer; and Mr. Jiayuan Xu, our Chief Financial Officer, will start the call with their prepared remarks and conclude with a Q&A session.

大家好，歡迎參加我們的 2023 年第二季度財報電話會議。該公司業績今天早些時候通過 Newswire 服務發布並發佈在網上。您可以訪問我們網站 ir.finvgroup.com 的 IR 部分，下載收益報告並註冊公司電子郵件提醒。李鐵錚先生，我們的首席執行官；我們的首席財務官徐嘉源先生將以準備好的講話開始電話會議，並以問答環節結束。

During this call, we will be referring to several non-GAAP financial measures to review and assess our operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For information about these non-GAAP measures and reconciliation to GAAP measures, please refer to our earnings press release.

在本次電話會議中，我們將參考多項非公認會計準則財務指標來審查和評估我們的經營業績。這些非公認會計原則財務指標不應被孤立考慮，也不能替代根據美國公認會計原則準備和提交的財務信息。有關這些非公認會計準則衡量標準以及與公認會計準則衡量標準的調節的信息，請參閱我們的收益新聞稿。

Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties are included in the company's filings with the U.S. Securities and Exchange Commission. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law.

在我們繼續之前，請注意，今天的討論將包含根據 1995 年美國私人證券訴訟改革法案的安全港條款做出的前瞻性陳述。前瞻性陳述涉及固有風險和不確定性。因此，該公司的業績可能與今天表達的觀點存在重大差異。有關這些以及其他風險和不確定性的更多信息包含在該公司向美國證券交易委員會提交的文件中。除適用法律要求外，公司不承擔更新任何前瞻性陳述的義務。

Finally, we post a slide presentation on our IR website providing details of our results for the quarter. I will now turn the call over to our CEO, Mr. Tiezheng Li. Please go ahead, sir.

最後，我們在 IR 網站上發布了幻燈片演示，提供了本季度業績的詳細信息。我現在將電話轉給我們的首席執行官李鐵錚先生。請繼續，先生。

Thanks, Jimmy. Hello, everyone, and thank you for joining our earnings call. This is Tiezheng Li, CEO of FinVolution Group. We are happy to speak with you today. Since our expansion into the Indonesian market back in 2018, we have continued to execute our local focus, global outlook strategy in the Pan-Asian region with unwavering determination. To date, we have cumulatively served our 28 million borrowers in China, Indonesia and the Philippines. By integrating our local business focus with an international perspective, we are able to leverage our expertise and insights derived from diverse markets to drive growth and foster innovation within our organization. We expect this strategy to produce further benefits as we expand into additional countries and strengthen our presence in our existing markets.

謝謝，吉米。大家好，感謝您參加我們的財報電話會議。我是李鐵錚，FinVolution集團首席執行官。我們很高興今天與您交談。自2018年進軍印尼市場以來，我們在汎亞地區繼續執行聚焦本土、放眼全球的戰略，決心堅定不移。迄今為止，我們已累計為中國、印度尼西亞和菲律賓的 2800 萬借款人提供服務。通過將本地業務重點與國際視角相結合，我們能夠利用來自不同市場的專業知識和見解來推動組織內部的增長並促進創新。我們預計，隨著我們擴展到更多國家並加強我們在現有市場的影響力，這一戰略將產生更多效益。

As China transitions into the post-COVID era, our recent July macroeconomic data continue to be challenging with pockets of improvement in the certain areas. However, macroeconomic data from the Asian markets in which we operate currently pens a more positive picture, reflecting growth across different operational metrics. Given these circumstances, we are adopting a strategy of progressive growth in the China market while pursuing rapid growth in the international market. While we await the domestic macro environment recovery from the current challenges, we have been continuously investing in R&D. We have substantially enhanced our technology, enabling us to streamline our processes, upgrade our customer experience and achieve improvements across the various markets in which we operate.

隨著中國進入後疫情時代，我們最近的 7 月份宏觀經濟數據繼續面臨挑戰，但某些領域出現了一些改善。然而，我們目前經營的亞洲市場的宏觀經濟數據呈現出更為積極的景象，反映了不同運營指標的增長。鑑於這種情況，我們採取了在中國市場逐步增長的同時，在國際市場追求快速增長的戰略。在等待國內宏觀環境從當前挑戰中復甦的同時，我們一直在持續投資研發。我們大幅增強了我們的技術，使我們能夠簡化流程、提升客戶體驗並在我們運營的各個市場中實現改進。

We are pleased to share that FinVolution's total transaction volume in the second quarter increased to RMB 47.3 billion, while our outstanding loan balance reached RMB 63.7 billion, up 14% and 13%, respectively, year-over-year. This growth validates our company's ability to efficiently adapt to the challenging economic landscape. We are continuing to meet the needs of our customers across our markets in the Pan-Asian region.

我們很高興地告訴大家，FinVolution第二季度的總交易量增至人民幣473億元，未償還貸款餘額達到人民幣637億元，同比分別增長14%和13%。這種增長驗證了我們公司有效適應充滿挑戰的經濟形勢的能力。我們將繼續滿足汎亞洲地區市場客戶的需求。

Technological innovation continues to be the core of our mission and the primary source of our competitive advantage. In July, we hosted the Eighth FinVolution Technological Competition. Our annual events showcasing and are cultivating technological talent and creativity. This year's event focused on the development of automatic speech recognition, ASR, to improve the technology's growth of Chinese [deadlines] and the language, aiming to increase chatbot's efficiency and accuracy when communicating with customers from different regions. Our commitment to innovation was recently recognized as the 2023 World Artificial Intelligence Conference, whereas the [CCTV] demand in the cooperation with University of Jiao Tong. Top message, Unifying Random Dropping for Graph Neural Networks was nominated for the outstanding thesis award.

技術創新仍然是我們使命的核心，也是我們競爭優勢的主要來源。 7月，我們舉辦了第八屆FinVolution技術大賽。我們的年度活動展示並培養技術人才和創造力。今年的活動重點關注自動語音識別（ASR）的發展，以提高中文[截止日期]和語言的技術發展，旨在提高聊天機器人與來自不同地區的客戶溝通時的效率和準確性。我們對創新的承諾最近被2023世界人工智能大會認可，而[CCTV]要求與交通大學合作。最重要的消息，《圖神經網絡的統一隨機丟棄》被提名為優秀論文獎。

Our investment in AI and the machine learning began years ago with R&D spanning across different product categories such as self-health services, chatbots, data analytics and credit risk assessment. Over the past several years we have been training our model utilizing billions of dollars of transaction data, steadily increased their accuracy. We currently employ a fully automated loan approval process with all of our funding partners, and our automated chatbot resolves about 80% of customer inquiries on average.

我們對人工智能和機器學習的投資始於幾年前，研發涵蓋不同的產品類別，例如自我健康服務、聊天機器人、數據分析和信用風險評估。在過去的幾年裡，我們一直利用數十億美元的交易數據來訓練我們的模型，穩步提高其準確性。目前，我們與所有融資合作夥伴採用全自動貸款審批流程，我們的自動化聊天機器人平均解決了約 80% 的客戶詢問。

We consistently embrace new technologies and deploy it into our daily operation to deliver a more personalized and tailored experience for our users. Along with the use of chatbots in customer service and to address early days delinquencies in the loan collection process, we have also upgraded to and streamline the user experience by automating self-op -- self-help functions and providing instant response for our users. In addition, we have incorporated AITC into our advertisement for our overseas business, increased our campaign audience targeting accuracy and achieving greater visibility on leading social media platform such as Facebook, Instagram and TikTok. As a result, during the month of July, our followers at TikTok rose to around 700,000, while followers on Facebook and Instagram reached 967,000 and 220,000, respectively.

我們始終如一地擁抱新技術並將其部署到我們的日常運營中，為我們的用戶提供更加個性化和量身定制的體驗。除了在客戶服務中使用聊天機器人並解決貸款催收過程中的早期拖欠問題外，我們還通過自動化自助操作和為用戶提供即時響應來升級和簡化用戶體驗。此外，我們將 AITC 納入海外業務的廣告中，提高了活動受眾定位的準確性，並在 Facebook、Instagram 和 TikTok 等領先社交媒體平台上獲得了更大的知名度。因此，7 月份期間，TikTok 的粉絲數量增至 70 萬左右，而 Facebook 和 Instagram 的粉絲數量分別達到 96.7 萬和 22 萬。

Furthermore, we strove to advance our commitment to promoting financial inclusion during the quarter. Aligning our ESG efforts with this business goals through better borrowing rates, we further optimized our average borrowing rate in China to 22.3%, ensuring our services are accessible and affordable for our borrowers. On a related note, I would like to share some updates on our ESG progress. We recently placed our 2022 ESG Report, the fifth in our company's history, demonstrating our dedication to transparency and sustainability. Responsible ESG reporting allow us to showcase our strong governance practice and our actions addressing the environmental and social issues affecting our industry.

此外，我們在本季度努力推進促進金融包容性的承諾。通過提高借款利率，使我們的 ESG 努力與這一業務目標保持一致，我們進一步將中國的平均借款利率優化至 22.3%，確保借款人可以獲得且負擔得起我們的服務。與此相關的是，我想分享一些有關我們 ESG 進展的最新信息。我們最近發布了 2022 年 ESG 報告，這是我們公司歷史上的第五份報告，展示了我們對透明度和可持續發展的承諾。負責任的 ESG 報告使我們能夠展示我們強有力的治理實踐以及我們解決影響我們行業的環境和社會問題的行動。

We are also empowering us to design effective future initiatives. For instance, since the launch of our entry-free loan for eligible small business owners in China, we have cumulatively supported over 11,000 small business owners in pursuit of their dreams. Our subsidiaries in the Indonesian and Philippine markets are also proactively engaging in ESG works, such as conducting cost management workshop to educate borrowers and launching a large-scale [integral trade] planting project to improve people's livelihoods in their local community along other activities. We firmly believe that aligning our ESG and the business goal will ultimately create long-term value for our stakeholders while achieving a positive social -- societal impact.

我們還授權我們設計有效的未來計劃。例如，自在中國推出針對符合條件的小企業主免入門檻貸款以來，我們已累計支持超過11,000名小企業主追逐夢想。我們在印尼和菲律賓市場的子公司也積極參與ESG工作，例如舉辦成本管理研討會以教育借款人，以及啟動大型[綜合貿易]種植項目以改善當地社區的民生等活動。我們堅信，將 ESG 與業務目標結合起來，最終將為我們的利益相關者創造長期價值，同時實現積極的社會影響。

Before we move on to additional operational and financial metrics with our CFO, I'd like to share that FinVolution celebrated its 16th anniversary during the second quarter, a milestone that affords us to a glimpse of our future outlook as an enterprise with sustainable growth. As we have grown and built the business throughout the years, we have accumulated a suite of technologies, skill sets and the capabilities that enable us to navigate and succeed in all the markets in which we operate. We will remain committed to our vision of leveraging innovative technology to make financial services better, propelling FinVolution's long-term sustainable growth along the way.

在我們與首席財務官討論其他運營和財務指標之前，我想告訴大家，FinVolution 在第二季度慶祝了成立 16 週年，這一里程碑讓我們得以一睹我們作為一家可持續增長企業的未來前景。隨著我們多年來業務的發展和建設，我們積累了一套技術、技能和能力，使我們能夠在我們經營的所有市場中導航並取得成功。我們將繼續致力於實現利用創新技術改善金融服務的願景，推動 FinVolution 的長期可持續增長。

With that, I will now turn the call over to our CFO, Jiayuan Xu, who will discuss our operational and financial results [for the year].

現在，我將把電話轉給我們的首席財務官徐佳媛，他將討論我們[今年]的運營和財務業績。

Thank you, Li, and hello, everyone. Welcome to our second quarter 2023 earnings call. In the interest of time, I will not go through all of the financial line items on this call. Please refer to our earnings release for further details.

謝謝李老師，大家好。歡迎參加我們的 2023 年第二季度財報電話會議。由於時間關係，我不會在本次電話會議上詳細介紹所有財務項目。請參閱我們的收益報告了解更多詳情。

As Li mentioned, the domestic macro environment continued to be challenging with pockets of improvements in certain areas. The official manufacturing Purchasing Managers' Index came in at 49.3 points in July compared to 49 points in June, and 48.8 points in May, according to data released by the National Bureau of Statistics on July 31, 2023. Meanwhile, total social financing data in July increased by just RMB 528 billion, below market expectation. Total retail consumption in July only increased by 2.5% compared with the same period last year. However, despite the challenging macro environment, we are encouraged by the strong operational and financial results we delivered in the second quarter of 2023.

正如李克強所言，國內宏觀環境繼續面臨挑戰，但部分領域有所改善。根據國家統計局 2023 年 7 月 31 日公佈的數據，7 月份官方製造業採購經理指數為 49.3 點，而 6 月份為 49 點，5 月份為 48.8 點。 7月份僅增加5280億元人民幣，低於市場預期。 7月份零售消費總額與去年同期相比僅增長2.5%。然而，儘管宏觀環境充滿挑戰，我們對 2023 年第二季度實現的強勁運營和財務業績感到鼓舞。

Driven by our stable and better quality borrower base, we achieved solid operational metrics in the second quarter in the China market. Cumulatively, we have served over 24 million borrowers in China, with the number of unique borrowers at around 2.3 million or 5% sequentially. Additionally, our China transaction volume reached RMB 45.5 billion, while our outstanding loan balance reached RMB 62.6 billion as of June 30, 2023, both up 12% on a year-over-year basis. Bolstered by our prudent approach to risk management with proven fraud detection technologies, we have maintained a stable risk level. In the second quarter of 2023, our day 1 delinquency rate was around 5.6%, and the vintage delinquency rate is expected to be around 2.3% for the quarter. Finally, thanks to our loan collection team's impressive efforts, our loan collection recovery rate maintained stable at around 90%.

在穩定且優質的借款人基礎的推動下，我們第二季度在中國市場實現了穩健的運營指標。我們已累計為中國超過 2400 萬借款人提供服務，其中獨立借款人數量約為 230 萬，佔上一季度的 5%。此外，截至2023年6月30日，我們的中國交易額達到人民幣455億元，未償還貸款餘額達到人民幣626億元，均同比增長12%。憑藉我們審慎的風險管理方法和經過驗證的欺詐檢測技術，我們保持了穩定的風險水平。 2023 年第二季度，我們的第一天拖欠率約為 5.6%，預計該季度的過往拖欠率約為 2.3%。最後，在我們的貸款催收團隊的努力下，我們的貸款催收回收率穩定在90%左右。

As we continue to fine tune our strategy of serving bad quality borrowers, our proportion of category A and B borrowers in the China market further expanded to 80% of our total borrowers in the second quarter compared with 74% in the same period last year. Furthermore, our transaction to bad quality borrowers help us to further optimize our funding costs during the quarter. We have also expanded our number of cumulative funding partners to 82 financial institutions and our pipeline of potential partners remains robust. All these operational improvements enable us to maintain a healthy take rate of around 3.1% during the second quarter.

隨著我們持續微調服務不良借款人的策略，第二季度中國市場A類和B類借款人佔借款人總數的比例進一步擴大至80%，而去年同期為74%。此外，我們與劣質借款人的交易有助於我們在本季度進一步優化融資成本。我們還將累積融資合作夥伴的數量擴大到 82 家金融機構，並且我們的潛在合作夥伴渠道仍然強勁。所有這些運營改進使我們能夠在第二季度保持 3.1% 左右的健康采用率。

As a company deeply committed to social responsibility, we continue to support small business owners during this challenging period. We have also noticed that our Small Business Owners segment has been recovering at a healthy pace. Most of borrowers from this segment are focusing on wholesale, retail, food and beverage industry. During the quarter, we served around 459,000 small business owners and facilitated RMB 11.5 billion of loans for them, representing an increase of around 11% compared with the same period last year and up 12% sequentially.

作為一家堅定致力於社會責任的公司，我們在這個充滿挑戰的時期繼續為小企業主提供支持。我們還注意到，我們的小企業主細分市場一直在以健康的速度復甦。該領域的大多數借款人都集中在批發、零售、食品和飲料行業。本季度，我們服務了約45.9萬名小企業主，為其發放貸款115億元人民幣，較去年同期增長約11%，環比增長12%。

Now I'd like to share some additional details on our international expansion efforts. Indonesia, our largest overseas market, recorded continued growth in its macro economy during the second quarter. Notably, on a monthly basis, the manufacturing PMI grew by 2.2 points to 52.5 points, and the business confidence index reached 99%. Indonesia economy continued to remain robust in the second quarter and has maintained growth of 5% over the past several quarters. Going forward, Indonesia economy is expected to maintain growth of around 5% in 2023. We anticipate that its domestic consumption will remain robust.

現在我想分享一些有關我們國際擴張工作的更多細節。印尼是我們最大的海外市場，二季度宏觀經濟持續增長。值得注意的是，按月計算，製造業PMI為52.5點，增長2.2點，商業信心指數達99%。印尼經濟第二季度繼續保持強勁，過去幾個季度均保持5%的增長。展望未來，預計2023年印尼經濟將保持5%左右的增長。我們預計其國內消費將保持強勁。

We are excited about the progress we have made in our overseas markets across multiple operational and financial metrics. Cumulatively, we have served over 4 million borrowers in Indonesia and the Philippines and continue to demonstrate significant growth in these countries. With the number of unique borrowers served during this quarter, reaching a new high at 786,000, up 22% from the same period last year. International transaction volumes sold by 100% year-over-year during the second quarter, reaching RMB 1.8 billion, while we set a new record in our outstanding loan balance at RMB 1.1 billion, up 131% year-over-year.

我們對海外市場在多個運營和財務指標方面取得的進展感到興奮。我們已累計為印度尼西亞和菲律賓超過 400 萬借款人提供服務，並在這些國家繼續呈現顯著增長。本季度服務的獨立借款人數量再創新高，達到 786,000 人，較去年同期增長 22%。第二季度國際交易額同比增長100%，達到人民幣18億元，貸款餘額創歷史新高，達到人民幣11億元，同比增長131%。

Our operations in the Philippines have also exhibited stronger-than-expected growth across numerous operating metrics. On a year-over-year basis, the number of unique borrowers, transaction volume and outstanding loan balance all grew by several times compared with the same period last year. Alongside these impressive operational metrics, international revenue maintained its robust growth trajectory reaching RMB 503 million, an increase of 112% year-over-year and contributed around 16% of total revenue in the second quarter.

我們在菲律賓的業務在多項運營指標上也呈現出強於預期的增長。同比來看，獨立借款人數量、交易量和貸款餘額均較去年同期增長數倍。除了這些令人印象深刻的運營指標外，國際收入保持強勁增長勢頭，達到人民幣 5.03 億元，同比增長 112%，佔第二季度總收入的 16% 左右。

We have consistently strengthened our relationships with both local traditional financial institutions such as Bank Permata and OCBC Bank, as well as innovative Internet banks such as Bank Jago and SeaBank. Thanks to this [flourishing] partnerships and our partners validation of our technologies and operational capabilities. Our percentage of loans in the second quarter facilitated by these institutions reached 65% compared with 39% in the same period last year. Going forward, we will further deepen our relationships with these institutions to increase our proportion of facilitation by local institutions and expand our network of local partners in the region.

我們不斷加強與 Permata 銀行和華僑銀行等當地傳統金融機構以及 Jago 銀行和 SeaBank 等創新互聯網銀行的關係。感謝這種[蓬勃發展的]合作夥伴關係以及我們的合作夥伴對我們技術和運營能力的驗證。第二季度，這些機構促成的貸款比例達到65%，而去年同期為39%。展望未來，我們將進一步深化與這些機構的關係，增加當地機構的協助比例，擴大我們在該地區的當地合作夥伴網絡。

Driven by our ongoing investments in technology and our strategy shift towards serving bad quality borrowers, our net revenues for the second quarter rose to RMB 3.1 billion, up 15% year-over-year. Net income for the second quarter reached RMB 590 million, up 1% year-over-year. Our leverage ratio, which is defined as risk-bearing loans divided by shareholders' equity remained stable at 4.3x. Recent times of uncertainty, our strong balance sheet and liquidity position continued to provide confidence to all our stakeholders and support the business growth for all our markets. In particular, our cash position remains robust with over RMB 8.2 billion of cash and the short-term liquidity as of the end of June 2023, representing an increase of 58% year-over-year and 6% quarter-over-quarter.

在我們持續的技術投資以及向低質量借款人提供服務的戰略轉變的推動下，我們第二季度的淨收入升至人民幣31億元，同比增長15%。第二季度淨利潤達人民幣5.9億元，同比增長1%。我們的槓桿率（定義為風險貸款除以股東權益）保持穩定在 4.3 倍。最近的不確定時期，我們強勁的資產負債表和流動性狀況繼續為我們所有利益相關者提供信心，並支持我們所有市場的業務增長。特別是，我們的現金狀況依然強勁，截至2023年6月末，現金和短期流動性超過82億元人民幣，同比增長58%，環比增長6%。

We also remain committed to optimizing shareholder value through our annual dividend policy and a share repurchase policy. We believe the current macro environment offers an attractive opportunity to return value to shareholders. And as such, during the first half of the year, we deployed around USD 46 million to repurchase our stock from the secondary market. As of June 30, 2023, we have cumulatively returned the USD 491 million to our shareholders through our dividend and stock repurchase programs. In addition, our Board of Directors has also approved a new share repurchase program of USD 150 million, reflecting our strong commitment to enhancing shareholder value. On a related note, our Chairman, CEO and other senior management have also expressed their confidence in the company through personal share repurchase totaling around 630,000 ADS in the first half of 2023.

我們還繼續致力於通過年度股息政策和股票回購政策來優化股東價值。我們相信當前的宏觀環境為股東回報價值提供了一個有吸引力的機會。因此，上半年我們投入了約4600萬美元從二級市場回購股票。截至2023年6月30日，我們已通過股息和股票回購計劃累計向股東返還4.91億美元。此外，我們的董事會還批准了1.5億美元的新股票回購計劃，體現了我們對提升股東價值的堅定承諾。與此相關的是，我們的董事長、首席執行官和其他高級管理層也通過 2023 年上半年總計約 630,000 美國存託股的個人股票回購表達了對公司的信心。

Given favorable macroeconomics conditions in our international markets and the progress we have made across numerous operational metrics for our international business, the company has increased its international transaction volume guidance for the full year of 2023 to RMB 7.7 billion, representing year-over-year growth of around 80%. Taking the current China macro environment into consideration, the company's 2023 guidance for its China market remains unchanged at between RMB 189 billion to RMB 205 billion, representing year-over-year growth of between 10% to 20%.

鑑於國際市場有利的宏觀經濟條件以及我們在國際業務多項運營指標上取得的進展，公司將 2023 年全年國際交易量指引上調至 77 億元人民幣，同比增長約80%。考慮到當前中國宏觀環境，公司2023年中國市場指引維持在1,890億元至2,050億元人民幣之間不變，同比增長10%至20%。

Before I conclude my remarks, let me provide some additional color on our biggest outlook for the third quarter of 2023. Despite some uncertainties in the macro environment, our business trajectory remains solid. We expect our transaction volume in China for the third quarter of 2023 to be around RMB 49 billion, representing an increase of around 10.4% year-over-year. We expect our transaction volume in international markets for the third quarter to be around RMB 1.9 billion, representing an increase of around 73% year-over-year.

在結束髮言之前，讓我對 2023 年第三季度的最大展望提供一些補充說明。儘管宏觀環境存在一些不確定性，但我們的業務軌跡仍然穩健。我們預計2023年第三季度我們在中國的交易額約為490億元人民幣，同比增長約10.4%。我們預計第三季度國際市場交易額約為19億元人民幣，同比增長73%左右。

In summary, our outstanding performance in the second quarter of 2023 underscores our dynamic business model, technological know-how and the dedication to advancing our international initiatives. Entering into the second half of 2023, we remain focused on refining our risk assessment and management framework, expanding our healthy customer base and optimizing our product mix. Looking ahead, we believe that we are well positioned to capitalize on the massive opportunities in both China and international markets, driving growth while creating greater value for our customers, shareholders and all of our stakeholders.

總之，我們在 2023 年第二季度的出色表現凸顯了我們充滿活力的商業模式、技術知識以及對推進我們的國際計劃的奉獻精神。進入2023年下半年，我們仍然專注於完善風險評估和管理框架、擴大健康客戶群並優化產品結構。展望未來，我們相信，我們有能力利用中國和國際市場的巨大機遇，推動增長，同時為我們的客戶、股東和所有利益相關者創造更大的價值。

With that, I will conclude my prepared remarks. We will now open the call to the questions. Operator, please continue.

至此，我將結束我準備好的發言。我們現在開始提問。接線員，請繼續。

(Operator Instructions) Our first question will come from Yada Li of CICC.

（操作員指令） 我們的第一個問題將來自中金公司的李亞達。

[Interpreted].

[解釋]。

I'll then now do my translation. This is Yada with CICC. And my first question today is about the asset quality trend. Considering the current macroeconomic conditions, what is the latest trend of leading indicators like day 1 vintage delinquency in July and August, and what can we expect going forward and how to affect our provision strategies?

那麼我現在就開始翻譯。我是中金公司的雅達。我今天的第一個問題是關於資產質量趨勢。考慮到當前的宏觀經濟狀況，7月和8月第一天的拖欠率等領先指標的最新趨勢是什麼？我們對未來有何預期以及如何影響我們的撥備策略？

And my second question is related to the international business. And could you please give us more color on the updates such as the progress of business expansion in new countries, business model and long-term strategic focus?

我的第二個問題與國際業務有關。您能否為我們介紹一下新國家業務擴張的進展、商業模式和長期戰略重點等最新情況？

(foreign language)

（外語）

[Interpreted] This is Jimmy. Let me do the translation for Alexis. Your first question is related to our risk assessment performance. As mentioned, our vintage delinquency performance is around 2.3% and it has always been around at 2.3% levels over the past few years, and our 30-day loan collection recovery rate is around 90%. And over the last few quarters, this metric has been relatively stable. And our vertical delinquencies has -- is at 1.68%, which is also at a low level. From observation, the current macro environment is relatively weak with recovery below expectation. And from observation, the credit market is doing okay, and we expect that it is going to maintain stable going forward, with risk performance staying stable as well. We have been through multiple credit cycles, including the COVID and the lockdowns, and we have proved that throughout all these cycles we have successfully navigated them and succeed after all these cycles.

[翻譯] 這是吉米。讓我為亞歷克西斯做翻譯。你的第一個問題與我們的風險評估績效有關。如前所述，我們的過往拖欠率約為 2.3%，過去幾年一直保持在 2.3% 左右的水平，我們的 30 天貸款回收率約為 90%。在過去幾個季度中，該指標一直相對穩定。我們的縱向拖欠率為 1.68%，也處於較低水平。從觀察來看，當前宏觀環境較為疲弱，復甦低於預期。從觀察來看，信貸市場表現良好，我們預計未來將保持穩定，風險表現也將保持穩定。我們經歷了多個信貸週期，包括新冠疫情和封鎖，我們已經證明，在所有這些週期中，我們都成功地度過了這些週期，並在所有這些週期之後取得了成功。

(foreign language)

（外語）

[Interpreted] Let me do the translation for Alexis. As you know, we are already in leading positions in the Indonesia and the Philippines market. And apart from these 2 countries, we are also looking at opportunities in other countries in the Southeast Asia and also looking at -- for high-growth opportunities in countries such as the Africa and Latin America. Our business model is not only restricted to online lending. We are also looking at opportunities -- for example, we're also looking at opportunities in Indonesia for off-line consumption scenarios. And as you know, the populations in Indonesia is young, and we are working with leading mobile phone brands in the Indonesia market to target these borrowers for mobile -- offline mobile phone consumption.

[口譯] 讓我為亞歷克西斯做翻譯。如您所知，我們在印度尼西亞和菲律賓市場已經處於領先地位。除了這兩個國家之外，我們還在東南亞其他國家尋找機會，也在非洲和拉丁美洲等國家尋找高增長的機會。我們的商業模式不僅限於在線借貸。我們也在尋找機會——比如我們也在印尼尋找線下消費場景的機會。如您所知，印尼人口年輕，我們正在與印尼市場領先的手機品牌合作，瞄準這些借款人進行移動——線下手機消費。

Okay, Yada, do you have any further questions?

好的，雅達，您還有其他問題嗎？

Our CEO would like to add a few more lines.

我們的首席執行官還想補充幾句話。

(foreign language)

（外語）

[Interpreted] Let me translate for Mr. Tiezheng. As you know, FinVolution was established 16 years ago, and we are very experienced in different business models such as online, offline and have very good working relationships with different partners. Some of the business models might not work in China market, but these are very useful experience for us when we penetrate into other countries.

[口譯]我來為鐵錚先生翻譯一下。如您所知，FinVolution成立已有16年，我們在線上、線下等不同商業模式方面擁有豐富的經驗，並與不同的合作夥伴擁有非常良好的合作關係。有些商業模式可能在中國市場行不通，但這些對於我們滲透到其他國家來說是非常有用的經驗。

As you know, we are also not the earliest company to venture into overseas market, but we are in leading positions in Indonesia and the Philippines because of our tech capabilities, our operational capabilities. And also, we have a huge base of talent pools. And with these advantages, we are able to leverage the capabilities and (inaudible) in our overseas market. And going forward, we are confident and expect further success in all these international markets.

大家知道，我們也不是最早進軍海外市場的公司，但我們在印尼和菲律賓處於領先地位，因為我們的技術能力、我們的運營能力。而且，我們擁有龐大的人才庫。憑藉這些優勢，我們能夠充分利用海外市場的能力（聽不清）。展望未來，我們充滿信心並期待在所有這些國際市場取得進一步的成功。

Our next question will come from Frank Zheng of Credit Suisse.

我們的下一個問題將來自瑞士信貸銀行的弗蘭克·鄭。

[Interpreted]

[解讀]

The first one is a follow-up on the international market. From a medium-term perspective, for example, 1 years' time, how would you foresee the profitability of international market operations? And the second question is on domestic market. Do we have plans to further tap into prime customers with APR less than 18% in order to further expand the volume as well as improve the risk performance?

第一個是國際市場的跟進。從中期來看，比如1年時間，您預計國際市場運營的盈利能力如何？第二個問題是國內市場。我們是否有計劃進一步挖掘年利率低於18%的優質客戶，以進一步擴大業務量並提高風險表現？

(foreign language)

（外語）

[Interpreted] Let me do the translation for Alexis. In the midterm, regarding our international market profitability, our international business is already profitable in the second quarter, but it is too relatively small compared to the China market. There are several reasons for this. Number one, it is affected by the rapid growth for our international business as we need to invest continuously. For example, our percentage of new borrowers in the Indonesia market is around 37%. And also, it has been affected by the deferred revenue because all these loans are conducted in installment loans.

[口譯] 讓我為亞歷克西斯做翻譯。中期來說，關於我們國際市場的盈利能力，我們的國際業務在第二季度就已經盈利了，但是相對於中國市場來說還是太小了。有幾個原因。第一，它受到我們國際業務快速增長的影響，因為我們需要持續投資。例如，我們在印度尼西亞市場的新借款人比例約為 37%。此外，由於所有這些貸款都是分期貸款，因此它受到了遞延收入的影響。

(foreign language)

（外語）

[Interpreted] Let me translate for Alexis for this question. In the second quarter, we further optimized our pricing to 22.3% from 22.7% in the first quarter. As you have seen, we are continually trying to explore to acquire better quality borrowers. Through our historical experience, lower pricing helped us to attract better quality borrowers, and better quality borrowers will have a higher level of stickiness on our platform. And if you observe, we have also -- our ROE is also higher compared to the industry average. And in the second quarter, our ROE from our reported earnings was about 3.7%, and we have also optimized our funding cost structure by around 30 bps -- refunding 30 bps in the second quarter, and going forward, we will consider a balance between pricing and our ROE.

[解釋]讓我為亞歷克西斯翻譯這個問題。第二季度，我們進一步優化定價，從第一季度的22.7%提高到22.3%。正如您所看到的，我們不斷努力探索以獲得更優質的借款人。根據我們的歷史經驗，較低的價格幫助我們吸引了更高質量的借款人，而更高質量的借款人將在我們的平台上有更高的粘性。如果你觀察的話，我們的淨資產收益率也高於行業平均水平。第二季度，我們報告收益的 ROE 約為 3.7%，我們還將融資成本結構優化了約 30 個基點——第二季度退還 30 個基點，展望未來，我們將考慮在定價和我們的淨資產收益率。

The next question will come from Alex Ye of UBS.

下一個問題將由瑞銀集團的 Alex Ye 提出。

[Interpreted] So my question is on the shareholders' return. So we are happy to see management announced USD 150 million of share buyback plan, which showcased management's focus on improving shareholder value. So if we look back to your track record on this buyback, how should we consider your pace on deploying such [filter] going forward? Should we consider the $150 million [quota] to be deployed over to your horizon as indicated by your authorization period? And also, is there any target payout ratio if we take into account both your dividend and buyback?

[解讀]所以我的問題是關於股東回報的問題。因此，我們很高興看到管理層宣布了1.5億美元的股票回購計劃，這體現了管理層對提高股東價值的重視。因此，如果我們回顧一下你們這次回購的記錄，我們應該如何考慮你們未來部署此類[過濾器]的步伐？我們是否應該考慮按照您的授權期限將 1.5 億美元的[配額]部署到您的視野範圍內？另外，如果我們同時考慮您的股息和回購，是否有目標派息率？

(foreign language)

（外語）

[Interpreted] Hello, Alex. Let me do the translation. Our share repurchase and buyback programs began in 2018, and we already have a few years of track record. And cumulatively we have returned about USD 260 million in the form of dividend to our shareholders and $230 million for share repurchases. In total, it is about $500 million returned to our shareholders. And the payout ratio if you calculate is around 30% to 40%. In terms of absolute amount, we are ahead of our peers. In the first half of 2023, our buyback amount is close to $50 million, and the payout ratio for our annual dividend was 18.5%. So the payout ratio for 2023 is likely to be higher than our average historical years. And as long as the market conditions allow and is favorable, we will continue to return value to our shareholders as validated by our past historical performance.

[翻譯]你好，亞歷克斯。讓我來翻譯吧。我們的股票回購和回購計劃於 2018 年開始，並且已經有幾年的業績記錄。我們已累計向股東返還約 2.6 億美元股息，以及 2.3 億美元用於股票回購。總計約 5 億美元返還給我們的股東。如果你計算的話，支付率大約在30%到40%左右。從絕對數量上看，我們領先於同行。 2023年上半年，我們的回購金額接近5000萬美元，年度股息支付率為18.5%。因此，2023 年的派息率可能會高於歷史年份的平均水平。只要市場條件允許且有利，我們將繼續向股東回報我們過去的歷史業績所驗證的價值。

And our next question will come from Thomas Chong of Jefferies.

我們的下一個問題將來自 Jefferies 的 Thomas Chong。

[Interpreted] My question is about the competitive landscape in overseas market. Can management share your thoughts about the future outlook? And on marketing spending, given we talk about Facebook is one of our channels, can you comment about the customer acquisition cost in overseas versus domestic market?

[解讀]我的問題是關於海外市場的競爭格局。管理層能否分享一下您對未來前景的看法？在營銷支出方面，考慮到 Facebook 是我們的渠道之一，您能否評論一下海外與國內市場的客戶獲取成本？

(foreign language)

（外語）

[Interpreted] Hello, Thomas. Let me do the translation. As you have known, our operations are mainly in the Indonesia and Philippines market and the macro environment in these countries are relatively positive. For example, in Indonesia, the GDP growth has been growing at over 5% for the last 7 quarters. And in 2023, the GDP growth is expected to maintain at around 5%. The Philippines market is slightly slower compared to the Indonesia market, but the GDP growth is still growing at around 4.3%. And the reason why we are able to maintain our leading status positions in these countries are because we have deployed our technology capabilities and operational capabilities into these countries. And in the second quarter, our number of unique borrowers has also reached a new high at 786,000 and we are constantly among the top 3 players.

[翻譯]你好，托馬斯。讓我來翻譯吧。如您所知，我們的業務主要集中在印度尼西亞和菲律賓市場，這些國家的宏觀環境相對積極。例如，在印度尼西亞，過去7個季度GDP增速一直超過5%。 2023年，GDP增速預計維持在5%左右。菲律賓市場較印尼市場略慢，但GDP增速仍在4.3%左右增長。而我們之所以能夠在這些國家保持領先地位，就是因為我們把我們的技術能力和運營能力部署到了這些國家。第二季度，我們的獨立借款人數量也創下了新高，達到 786,000 人，並且一直穩居前三名。

These markets, Indonesia and Philippines, are huge markets and are at early stages for us. So we will continue to invest and maintain leading positions into these countries as supported by our technologies and operational capabilities. Our efforts and capabilities has also been recognized by local financial institutions. For example, this can be validated by the increase in the proportion of loans funded by local partners from 65% in the second quarter compared to only 39% in the same period last year. For sales and marketing, the amount we spent is around RMB 80 million has been invested into sales and marketing in the second quarter. And apart from Facebook, we are also investing into TikTok. We believe all these information fixed channels will be good channels for us to acquire our new borrowers going forward.

印度尼西亞和菲律賓這些市場是巨大的市場，對我們來說還處於早期階段。因此，我們將在我們的技術和運營能力的支持下，繼續在這些國家進行投資並保持領先地位。我們的努力和能力也得到了當地金融機構的認可。例如，本地合作夥伴提供的貸款比例從第二季度的65%上升到去年同期的39%，就可以證明這一點。在銷售和營銷方面，我們第二季度投入了約8000萬元人民幣用於銷售和營銷。除了Facebook之外，我們還投資了TikTok。我們相信所有這些信息固定渠道將成為我們未來獲取新借款人的良好渠道。

Do you have any other questions?

你還有別的問題嗎？

[Interpreted] Thanks, management, for taking my second question. My question is about AI. In the prepared remarks, we talked about we have been investing in AI for many years and apply AI in different scenario. Given LLM, it's such a hot topic in the Internet sector these days, and people talk about LLM or industry LLM, I just want to get some thoughts from management with regard to this area, whether we are thinking of developing our own LLM or we are seeking a partnership with the top players.

[解釋] 謝謝管理層回答我的第二個問題。我的問題是關於人工智能的。在準備好的發言中，我們談到我們多年來一直在人工智能領域進行投資，並將人工智能應用於不同的場景。鑑於LLM，現在在互聯網領域是一個很熱門的話題，人們談論LLM或行業LLM，我只是想從管理層那裡得到一些關於這個領域的想法，無論我們是在考慮發展自己的LLM還是我們正在尋求與頂級玩家的合作夥伴關係。

(foreign language)

（外語）

[Interpreted] Hello, Thomas. Let me do the translation for Mr. Tiezheng. Honestly, the generative data model is not for a company of our size as it needs to be at a country level where that the huge resources are required for development. Our focus is on the implementation of AI models into our operations and to our daily operations in order -- in an attempt to increase our efficiency. And also, we will be looking at specific opportunities that are suitable for us for deployment into our business where we can also consider to work with other partners to increase our efficiency.

[翻譯]你好，托馬斯。讓我為鐵錚先生做翻譯吧。老實說，生成數據模型不適合我們這種規模的公司，因為它需要在國家層面，需要大量的資源來發展。我們的重點是將人工智能模型按順序實施到我們的運營和日常運營中，以提高我們的效率。此外，我們將尋找適合我們部署到我們業務中的具體機會，我們也可以考慮與其他合作夥伴合作以提高我們的效率。

And the next question will come from Cindy Wang of China Renaissance.

下一個問題將來自華興資本的Cindy Wang。

[Interpreted] This is Cindy from China Renaissance. So I have 2 questions. The first question is related to the overseas institutional funding. So we've seen the institutional funding testing going up pretty quickly. So in the midterm, what's the percentage contribution will be contributed from the institutional funding?

[解說]我是華興資本的Cindy。所以我有兩個問題。第一個問題涉及海外機構資助。因此，我們看到機構資金測試的增長速度非常快。那麼在中期，機構資金的貢獻比例是多少？

The second question is related to provisions. So we see the asset quality has been improving in the second quarter. However, the provision compared to first quarter has been slightly up. So can we talk about what's the difference between here and whether we have any write-back in the second quarter? And how do we foresee the provision in the second half of this year?

第二個問題涉及條款。所以我們看到第二季度資產質量一直在改善。不過，撥備與第一季度相比略有上升。那麼我們能談談這里和我們第二季度是否有回寫之間有什麼區別嗎？那麼，我們對今年下半年的規定有何看法？

(foreign language)

（外語）

[Interpreted] Let me do the translation. We have -- as mentioned, we have around 65% of funds -- 65% of the loans in Q2 was funded by local Indonesian partners in the second quarter, and we expect this amount to be around 80% by the end of the year. Going forward, we still think that there is opportunity for us to further increase this proportion, but our next focus will be on the funding cost where we need to do some optimization on our funding cost for the international markets.

[翻譯] 讓我來翻譯一下。正如前面提到的，我們擁有大約 65% 的資金，第二季度 65% 的貸款是由印尼當地合作夥伴在第二季度提供的，我們預計到今年年底這一數額將達到 80% 左右。展望未來，我們仍然認為我們有機會進一步提高這一比例，但我們接下來的重點將是融資成本，我們需要對國際市場的融資成本進行一些優化。

Going to the next question, when we did a look at the provisions, we need to divide into domestic and international provisions. The main reason is because our international business is growing at a very rapid rate. This is the reason for the provision levels to be higher. In the first quarter, there was a write-back. And now if you take a look at the domestic China recovery, the recovery is still weak and bit slightly below expectations. So we don't have any plans to write back at the moment, but all these will change when the economy is recovering at a faster pace. And there -- we believe there will be opportunities for write-back going forward.

說到下一個問題，我們在看條款的時候，需要分為國內條款和國際條款。主要原因是我們的國際業務正在以非常快的速度增長。這就是撥備水平較高的原因。第一季度出現回寫。現在如果你看看中國國內的複蘇，復甦仍然疲弱，略低於預期。所以我們目前沒有任何回寫的計劃，但是當經濟以更快的速度復甦時，所有這些都會改變。我們相信未來會有回寫的機會。

At this time I would like to turn the call back over to the company for closing remarks.

此時我想將電話轉回公司進行結束語。

Thank you once again for joining us today. If you have further questions, please feel free to contact me or my Investor Relations team. Thank you so much.

再次感謝您今天加入我們。如果您還有其他疑問，請隨時聯繫我或我的投資者關係團隊。太感謝了。

This concludes this conference call. You may now disconnect your lines. Thank you.

本次電話會議到此結束。您現在可以斷開線路。謝謝。

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[本文字記錄中標記為[已翻譯]的部分是由現場通話中的口譯員朗讀的。]